probably each of us has not avoided encountering the topic of rising prices recently. How do high energy prices affect our borrowers’ evaluation process?
What did we change in credit-risk assessment?
We select borrowers even more carefully – if the client has low income, we more conservatively estimate living expanses and, although we could formally lend, we reject the application. In this way, we protect not only investors, but also the borrower, who may face difficulties at the start of the heating season due to excessive financial obligations.
For now, the solvency of existing customers remains unchanged. Nevertheless, we have tightened our customer selection criteria. We pay particular attention to sector risk – in the near future we expect increasing delays in the manufacturing, accommodation and catering, and wholesale trade sectors, and we evaluate these companies more conservatively.
We strenghten our team
Since the beginning of our activity, we have taken a responsible approach to the credit-risk assessment. We are responsible for our investors’ money. In order to have more resources for in-depth assessment of new loan applications, we are hiring a new credit-risk assessor.
We are also preparing for a possible increase in the number of non-performing loans and we are expanding our debt collection team.
Gourmet food store The Meat Point is a long-standing customer of ours. The company manages two stores in Vilnius and Kaunas, and sells in its online store.
The company has been growing rapidly recently and is borrowing to supplement its working capital. The company paid a significant part of the previous loans’ instalments late, therefore, in order to ensure the safety of investors’ funds the loan is secured with a personal guarantee and a pledge of two cars with a market value of about 43.000 Eur (58% LTV).
We determined the market value of the cars in the Emprekis database and additionally assessed the value with the prices published in car advertisements.